Oakland County seeks alternatives to 'monopolistic' Detroit water and sewer

3:36 PM, April 3, 2014

Oakland County is seeking alternatives to use of the Detroit Water and Sewerage Department, which currently provides water services to 34 Oakland County communities and sewer services to 37 towns or townships. / 2006 photo by Eric Seals/Detroit Free Press

A proposal to spend as much as $3 million to study alternatives to “the continued, monopolistic use” of the Detroit Water and Sewerage Department was approved by the Oakland County Commissioners’ finance committee this morning.

The resolution was passed in a 9-0 vote by the finance committee this morning and is scheduled to be considered by Oakland County’s full board of commissioners on April 17.

“This is such a huge issue. This is so regional. And it’s a utility — it’s fresh water — amd we are dealing with the basic necessity for human beings,” said Oakland County Commissioner Robert Gosselin who is serving as a chairman of a study group. “We wanted to take a step back, and say, ‘let’s check our options out.”

The decision by Oakland County marks another twist in the fractious negotiations over Detroit’s water and sewer system as the city works to restructure its $18 billion in debt and emerge from bankruptcy.

Oakland County and other surrounding counties have been reluctant to form a regional authority that would include a minimum annual lease payment of $47 million because of the past mismanagement, state of disrepair and debts of the Detroit Water and Sewerage Department.

However, any attempt to form an independent water system would be enormously expensive, experts said, and could be further complicated by the long-term contracts the suburbs have with the city.

“I think we could probably put it under the counties and have a better success with them m managing the system than the present people that own it,” Gosselin said.

Negotiators for Oakland and Macomb counties are opposed to any plan that forces them to pay higher rates or to pay for debts the city’s department has racked up over the years and say the city has not shared enough financial information for them to make an informed decision on the proposal to form a new regional authority.

The county’s move to formally explore alternatives comes one week after Detroit decided to seek bids from private contractors to operate and manage its sprawling system.

Detroit’s Water and Sewerage Department provides water services to 34 Oakland County communities and sewer services to 37 towns or townships. In total, Detroit’s system supplies water to more than 4 million customers throughout the city and in 127 suburban communities, making it one of the largest systems in the nation.

Macomb County officials said they also are interested in exploring alternatives to the Detroit water department, although money for such an undertaking hasn’t been set aside, said Richard Sulaka Jr., deputy commissioner of Macomb County public works.

“That’s something we have definitely identified,” Sulaka said. “How can we protect our rate payers the most and give them the best quality of service for the long term?”

The Detroit department’s operating losses have topped $1.5 billion over the last seven years, according to Oakland County.

Bill Nowling, spokesman for Detroit emergency manager Kevyn Orr, said: “The counties are free to pursue any alternative they believe is in their best interests.”

Oakland County’s resolution, if passed by commissioners, would allow the county to hire technical, financial, legal and other experts to evaluate other water and sewer service options. Exactly what alternatives Oakland or other surrounding counties might have, and how much they would cost, was unclear as of late Wednesday. But it would likely be extremely expensive.

Ronald Kaiser, who studies water management at Texas A&M University, said it can easily cost a municipality $2 million per mile to build new water pipelines.

Detroit decided to solicit offers from private companies after 10 months of negotiations with surrounding counties became deadlocked. The city has asked private contractors to respond by Monday with initial proposals if they are interested in bidding on the operation and management of the city’s water and sewer systems and will ask qualified bidders for binding offers by June 1.

Originally, the city asked the counties to form a Great Lakes Water Authority to manage water and sewer services to the city’s present customers. That authority, which would include Oakland, Wayne, and Macomb counties, would lease Detroit’s water and sewer systems and pay the City of Detroit $47 million annually.

Negotiators from Oakland, Macomb and Wayne counties and Detroit all met again Tuesday in Oakland County, but there was little progress.

Sulaka said negotiations with Orr’s office continue to be rocky.

“Unfortunately, the terms have been dictated to us, and there hasn’t been much deviation from that,” Sulaka said.

Wayne County Executive Robert Ficano, however, took a different stance. He said county officials involved in the water negotiations should focus on reaching an agreement for a regional authority.

“We can’t keep going to brinksmanship all the time on this,” Ficano said. “At this point, we’ve got to try to resolve this and come together as a region.”